COVID 19 and the Business Landscape: Why Small Business Start-ups are Taking Off
The Coronavirus hit at the close of 2019, but its severity and global impact spread at an alarming rate reaching a worldwide scale by March of 2020. From this point on, business in all economic sectors took a progressive downward trend thanks to the disruption. Many downsizing and others completely shutting down. Just weeks after the onset of the pandemic many small businesses had experienced dislocations. From the PNAS survey of 5,800 small businesses affiliated with Alignable these statistics confirm the above trend.
Source: PNAS.ORG
The Professional service industries were less impacted by the crisis because they were able to better transition to remote work than the entertainment and hospitality industries.
However, small businesses are no strangers to crises. They are survivors that thrive on the innovative minds of optimistic entrepreneurs. In the face of challenges, they either adopt or morph into entirely new ventures.
That has been the case for small businesses since 2021. After the initial shock of the pandemic and lockdown, business owners started responding by adopting new strategies to survive the new landscape while more people started venturing into entrepreneurship.
The U.S Census Bureau reported that 4.4 million new businesses launched in 2020, 23.4% higher than the record in 2019. Here is the even more shocking news, in January 2021 alone, over half million new small businesses came into the market..
Small Businesses Statistics 2020-2021:
Source: US Census Bureau
Florida recorded the highest number of new business applications with close to half a million entries, followed by Carlifornia, Texas, Georgia and Newyork. However, Georgia had the highest record based on new business formations performance per county with a growth of 56%. Both North and South Dakota experienced a decline in the number of small businesses launched in 2020 compared to the previous year.
Economic experts theorize that the reasons for this surge in new start-ups despite the crisis are accessibility to technology, increased creativity from spending more time at home, and spare time.
Challenges give rise to creativity. It is a basic human instinct to survive. That is why entrepreneurs are born during tough times.
Covid 19 brought about layoffs, business shutdowns, and furloughs that pushed people to look for alternative means of survival.
Reasons for the Rise of Start-Ups During the Pandemic
Source: Salesforce Report SAL706
According to studies and surveys conducted by various organizations into entrepreneurship during the Covid 19 pandemic, the top reasons for the upsurge include the following:
Increased Creativity
With a long hiatus from work, lockdown, and too much time on their hands, people had to get creative to beat the boredom, if not for anything else. Fitness trainers started online video sessions, therapists and teachers launched virtual sessions and classes, employed professionals joined freelance sites to offer their skills.
The Desire to Be Self-Employed
Another reason for the increase in start-ups is the desire to be in charge. The pandemic only enhanced this desire.
Necessity
The closure of many businesses necessitated the additional income stream, which led to most people venturing into side hustles. For others, the pandemic accelerated their plans of going entrepreneurial. The survey by Salesforce has shown that 12.6% of new businesses were opportunities people recognized during the pandemic.
Availability of Less Capital Intensive Side Hustles
Without the need for office space, a big team, or inventory, the barrier to entry drastically dropped for people interested in starting a business. Studies indicate new start-ups launched on a budget of fewer than 10,000 dollars, with half that number having below 5000 dollars capital. Here are a few online businesses to start on a 1000-bucks budget
Technological Advantage
Starting a business has never been easier than today in the age of technology. The rise of freelance consultancies is proof of that. With layoffs and furloughs at work, most professionals transitioned into freelancing thanks to the internet. The digital capabilities made it easier to start a business without physical space. From fitness enthusiasts offering training over video calls to professionals giving services via app-based or job platforms, the opportunities just became endless.(Get access to business start up training: From business planning to website creation and marketing strategies)
Small Businesses Trends and Opportunities for Growth During the Pandemic Beyond 2022
The rise of the post-pandemic generation of businesses is highly characterized by technological adoption and application.
Because of the lockdown and staying at home, of course, most people had to carry out their interactions with customers online.
Some of the key trends of the new start-ups in 2021 include:
- They operate remotely
- They use digital marketing activities
- They apply modern customer experiences such as mobile-based communication, curbside pick-ups, etc.
- They prioritize customer safety
Trends in Business Communication and Operation Software
Source: Salesforce Report SAL706
Opportunities for Business Growth in 2022
The pandemic brought in challenges that necessitated solutions and the savvy entrepreneurs seized the opportunities to be the problem-solvers. According to Salesforce, over 60% of startup owners ventured into new markets. Another 61% of existing owners developed new products and services to suit the impacts of the pandemic.
Technology was also a major player in propelling and enabling new startups growth.
Lastly, the government relief programs went a long way to create favorable conditions. These include federal assistance programs such as credit access and guarantees, salary subsidies, tax deferrals, and taking care of household members.
Conclusion
With so many innovative minds coming up with creative solutions for this crisis, it’s no surprise that these agile thinkers are now poised as some of today’s most successful young business ventures- not just because they were able to survive but thrive during one of our toughest times but because they’re great at solving problems.
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